Walmart's New Cost-Cutting Target: The Ad World

Having driven cost out of distributing goods for decades, Walmart has a newer vision: Driving waste out of advertising and media. And not just for itself. As Brian Monahan, VP-marketing of Walmart.com said in a talk at the Ad Age Digital Conference on Tuesday, the retailer hopes to do the same for its suppliers, too.

Brian Monahan, Walmart.com

Mr. Monahan, who came to the top marketing post at Walmart's San Bruno, Calif.-based online retail operation last year from Interpublic's Magna Global, made clear one of the advantages of Walmart bringing in a career media executive with a technological bent. He knows about software, having among other things helped set up Interpublic's agency trading desk for programmatic buying of digital media.

"Media planning today is beyond human comprehension," Mr. Monahan said. "There are so many choices on where you can put your precious investment. It's a software problem."

The software required is powerful, he said. "Making software is hard. Many of us in the marketing world try to fake it. If you don't have the stomach for it or the capitalization for it, don't do it."

Walmart, on the other hand, appears to have both the stomach and capitalization for the job, as Mr. Monahan sees it. He described the company's big investment in its 2,000-employee-strong @WalmartLabs operation in Silicon Valley that has been "hiring and acquiring all kinds of great engineering talent" who can bridge the divide between online and offline retailing.

Among recent projects of @WalmartLabs was a proprietary search-bid-management platform to manage a portfolio of 50 million keywords, not just for Wamart but also for suppliers "so we can manage and optimize in real time against a profit constraint."

Another @WalmartLabs program helps optimize and dynamically assemble 15 million creative units a day to retarget people who visit its website.

While Mr. Monahan is a Walmart newcomer, he already has a favorite quote from founder Sam Walton: "We're all working together." And he argued that Mr. Walton's 1987 epiphany about the importance of collaborative merchandising and marketing with suppliers to serve "our shared customer" ranks with the most important business discoveries ever.

On the marketing front, he pointed to WMX or the Walmart Exchange, rolled out last year. Mr. Monahan called "a digital marketing platform where we share data with suppliers to help give relevant messaging to customers and to measure that sales result at the world's largest retailer. It also allows the company to "take costs out of the system."

Removing unnecessary costs from media is no different from Walmart's mission of removing costs from the supply chain that distributes goods, as Mr. Monahan sees it.

"Walmart gets up in the morning to help regular people save money," he said. "We have to get this inefficient waste out of the advertising ecosystem so we can return that value to our customers and we can invest in the type of creative, awesome marketing that we all want to do."

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Jack Neff

Jack Neff, editor at large, covers household and personal-care marketers, Walmart and market research. He's based near Cincinnati and has previously written for the Atlanta Journal Constitution, Bloomberg, and trade publications covering the food, woodworking and graphic design industries and worked in corporate communications for the E.W. Scripps Co.